Trademark's reputation must be based on Canadian not foreign use, says FCA

The publisher of a daily newspaper in India lost his appeal to the Federal Court of Appeal last week when that court found that the appellant’s word mark lacked distinctiveness.

Trademark's reputation must be based on Canadian not foreign use, says FCA
The Federal Court of Appeal rejected reliance on use of a trademark outside Canada to establish distinctiveness of the appellant’s mark in Canada, says Tamara Ramsey of Chitiz Pathak LLP in Toronto, who was counsel for the respondent.

The publisher of a daily newspaper in India lost his appeal to the Federal Court of Appeal last week when that court found that the appellant’s word mark lacked distinctiveness.

The decision “affirms the test for distinctiveness when you’ve got two competing traders, and whether the second trader has negated the distinctiveness of the mark for the first trader,” says Tamara Ramsey, a civil litigator at Chitiz Pathak LLP in Toronto, who was counsel for the respondent in the case.

“If you’ve got a long period of concurring use and more than one person using the mark, it’s going to be very difficult to maintain the distinctiveness” of the mark, she says.

In Sadhu Singh Hamdard Trust v. Navsun Holdings Ltd., both parties used the word mark “AJIT” for their respective newspapers, one published in India and the other in Canada. The word mark was similarly stylized in each masthead.

The appellant publishes a Punjabi subscription daily newspaper, Ajit Daily, in India, which has been distributed in Canada since 1968. During the period from 1970 to 2010, the appellant had its highest distribution in Canada from 1990 and 1993, when it averaged 29 annual subscriptions.

The respondent, Navsun Holdings, has published a free newspaper, Ajit Weekly, since about 1993, which is distributed in Vancouver and the Greater Toronto Area. As of the date of filing its opposition, circulation of the respondent’s newspaper was roughly 11,000 newspapers per week in Vancouver and another 13,000 per week in Toronto and region.

In assessing the distinctiveness of the AJIT mark, the Trademarks Opposition Board had relied on an earlier Federal Court decision in Bojangles’ International LLC v. Bojangles Café Ltd., in which that court articulated the standard to prove that a trademark is sufficiently well known so as to negate another mark’s distinctiveness. Under that test, a mark “must be known to some extent at least to negate the established distinctiveness of another mark, and its reputation in Canada should be substantial, significant or sufficient.”

After a review of the evidence, the Board was satisfied that the respondent’s mark was known sufficiently to negate the distinctiveness of the mark applied for by the appellant.

The Federal Court noted that in 2010 the appellant had amended its registration of the mark to “cover printed publications and newspapers.” specifically removing registration in respect of “printed and electronic publications.” It found whether online readership was within the scope of the registration was a new issue, raised for the first time at the hearing of the appeal. It concluded that the new evidence advanced by the parties, including evidence of online readership and newspaper subscriptions in India, would not have materially affected the Board’s determination, and excluded it.

In dismissing the appeal from the Federal Court decision, Justice Donald Rennie of the Federal Court of Appeal wrote that, “It is incumbent upon a trader to protect the distinctiveness of its mark, even in the face of infringing use. It was open to the appellant to take sufficient steps to protect its rights to the impugned mark, which it did not do.”

The appellant, Sadhu Singh Hamdard Trust, “had argued that since it was the first entity to use the mark in Canada, that this made any subsequent use infringing, and that since infringement is a tort, its opponent should not be allowed to rely on its own tortious conduct,” explains Michael Shortt, an intellectual property lawyer and trademark agent at Fasken Martineau DuMoulin LLP in Montreal, in an email to Legal Feeds.

“This is a variation of the classic rule that parties cannot benefit from their own wrongdoing.”

But the Federal Court of Appeal rejected this argument, Shortt adds, ruling that if a mark lacks distinctiveness, "the underlying cause is irrelevant.” So, even infringing use can destroy a trademark's distinctiveness if it goes on for long enough (in this case, more than 20 years).

The Federal Court of Appeal noted that this puts a burden on trademark owners to proactively police and protect their marks, says Shortt. “Trademark owners should heed this warning. Merely having a registration or common law rights in Canada may not be enough. They may need to take proactive steps to keep infringers and copycats off the market.”

The decision also rejected reliance on use outside Canada to establish distinctiveness of the appellant’s mark in Canada. “That will be increasingly significant in our global world, where you have different brands in different countries,” says Ramsey.

Evidence based on the trademark’s reputation among recent Punjabi-speaking immigrants to Canada was rejected in this case, Shortt points out.

“This means that reputations earned overseas cannot be carried into Canada via immigration of consumers familiar with the mark. Subject to some very special circumstances . . . a trademark's reputation will need to be built on the foundation of Canadian use, not use overseas,” he adds, and “foreign trademark owners cannot rely on the existence of a Canadian diaspora as a basis for distinctiveness arguments. They will need to invest in Canadian use and advertising to protect their mark's distinctiveness.”

Another live issue was whether the use of the trademark on the internet (e.g., use in association with electronic newspapers) could be relied upon to establish distinctiveness, Ramsey says. The courts found that “having distinctiveness and use with one service doesn’t necessarily carry over to another,” she notes. “And just because you have a mark on the internet doesn’t mean you’re actually using the mark for trademark purposes” as defined in the Trade-marks Act.

“This contrasts with past cases in Canada and the United States that were more willing to consider a technologically neutral approach to trademark use,” says Shortt. “It remains to be seen if this more formalistic approach will be carried over into other cases or confined to the somewhat unique facts and issues in Sadu Singh Hamdard Trust.”

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